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Alleghany reported its first quarter results on May 6, 2013. Stockholders’ equity per common share increased to $394.71 as of March 31, 2013, up 4.1% from $379.13 at December 31, 2012. Pre-tax earnings for the quarter, before merger-related items, came in at $265.0 million, up from pre-tax earnings, before merger related items, of $181.8 million for the year-ago quarter.

Rising Estimates

Zacks consensus estimate for the current quarter has increased to $6.72 per share from $5.80 per share 60 days ago and similarly, the estimate for the current year has gone up to $28.50 per share from $23.15 per share.

The company has delivered a positive earnings surprise in each of the last four quarters, with an average positive surprise of about 55%.

For the five years ended December 31, 2012, Alleghany’s common stockholders’ equity per share increased at a compound annual rate of 6.1%, compared with a compound annual rate of return of 1.6% for the S&P 500 over the same time period.

The Bottom Line

The management believes that with their excellent portfolio of investments and businesses, they can produce 7-10% growth in book value per share per year over the long term, and can double shareholder value at least every ten years.

With an excellent portfolio and exceptional management philosophy, Alleghany looks like a min-version of Berkshire Hathaway.

Alleghany is a Zacks Rank#1 (Strong Buy) stock. It also has a Zacks recommendation of “Outperform”. Further, the Zacks Industry rank of 7 (out of 265) also indicates strong potential for outperformance in the short- to mid-term. I believe that this stock will be an excellent long-term addition to any portfolio.

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